In studies of the encoding and processing of information in the peripheral auditory system, we have recorded sequentially from hundreds of different cochlear nerve fibers in the same cat. By carrying out Fourier analysis of the resulting period histograms, it is possible to obtain measures of response amplitude and phase for frequencies present in the stimulus and for frequencies that represent distortion products generated in the cochlea. These studies have demonstrated striking similarities between the spatial distribution of distortion signals of a particular frequency and the response to single tone acoustic signals of the same frequency, suggesting that both are propagated in the cochlea by the same mechanism. Parallel theoretical studies of a cochlear mechanical model and of distortion generation in polynomial nonlinear transfer function have given us a basis for interpreting the experimental results. A current study is examining the details of the phase relationships between stimulating frequencies and frequencies present in the response, with the intent of distinguishing propagated and locally generated distortion components and better understanding the mechanisms of generation. Other studies of the effect of noise damage upon the generation of distortion products in the cochlea of the chinchilla are under way.